Just launched is the SEE Companies ethical accreditation scheme for companies that identifies companies taking social, environmental and ethical (SEE) issues seriously.
I welcome this: most CSR investment screening is simple greenwash. Take the tax questions as an example (into which I'll disclose I had an input) which require a company to answer the question:
Has your company paid appropriate levels of tax over the last two financial years?
Guidance notes add:
ANSWERING YES
Companies must, for the last two financial years:
- state the date of publication;
- state the tax bracket that applies to their business; and
- state the percentage of tax they have paid.
Companies may provide any other relevant information.ANSWERING NO
Companies must, for the last two financial years:
- state the exact amount of profits generated;
- state the tax rate that applies;
- state the amount of tax paid and the percentage this represents; and
- explain why they paid taxes at a different rate.
Companies may provide any other relevant information.ANSWERING NOT APPLICABLE
Companies must:
- confirm that they have not made profits in both of the last two financial years; OR
- explain why they are not subject to taxation.DON'T KNOW is not a permissible answer to this question.
NO ANSWER YET is only permissible under extraordinary circumstances and then for only a limited period.
It's about time ethical screening included such issues.
As it should also cover this one:
Is your company's average employee salary at least 5% of the total remuneration of its highest paid executive?
I can see this type of screening becoming very popular, quite soon when it becomes clear by just how much high paid fools have abused UK companies during the last few years.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Hi Richard
I like what SEE are trying to do here and I would encourage them to go further with this … the language and level of specificity needs a lot of tigthening up though I cannot find the guidance note you refer to. I think the Burma question is a good example, it is way too qualified and almost impossible to interpret. I think the environment section is not comprehensive without a measure on water use.
re seepotential website, business case it says:
‘But to date there has been little consensus over what constitutes responsibility and there has been no way of measuring it. Now a myriad of businesses claim to be responsible on a variety of grounds.’.
This is not so. The Global Reporting initiative which grew up out of UNEP and CERES has been around for 10 years to solve exactly this problem and it operates as a multi stakeholder initiative. GRI has issued three iterations and is working on the fourth. It is now defacto the standard for ethical reporting.
James
Hi James, thanks for your comments.
To access the answering guidelines, go to SEEcompanies.com. Select, for e.g., human rights from the drop down menu on the homepage. Click on Question 3 of the five listed. On the question page you will see the question at the top:
Is your company in joint ventures, or does it have any business relationships, with a military regime such as that in Burma (also known as Myanmar)?
Immediately underneath are these two lines: ‘Question developed with Burma Campaign UK’ and ‘Show/hide answering guidelines’. The show/hide text is a link, all the answering guidelines are available here.
In regards your comment about the GRI, the point we are making (or trying to make at least) is until the ‘man in the street’ feels able to distinguish the best SEE businesses from the rest, while he considers all businesses to be as bad as each other, distrust in business will continue to grow. This will especially be the case if big companies continue to externalise costs onto society and onto the environment despite producing GRI reports.
In 2005 Ipsos MORI found that 75% of Britons found it difficult to know which products or companies met higher ethical standards. Now, despite the GRI, that figure has grown to 81%.
Reporting to GRI standards, or as is often the case, making some portion of your corporate report ‘GRI compliant’, is not an indication that your company is minimising its negative social, environmental and ethical (SEE) impacts.
GRI compliant reports do not reveal where a company has selectively addressed SEE concerns or tried to divert attention from its most negative impacts with headline grabbing schemes (greenwashes). These are widespread and legitimate criticisms of corporate reports.
The GRI has built some consensus around best practice on various SEE issues. It may also have been the best there has been to date and, as you put it ‘the defacto the standard for ethical reporting’ but, as our research clearly shows, people are now LESS minded to trust the ethical claims businesses make. Does it matter to the ‘man in the street’ that some multinational oil companies or banks report to GRI standards and others do not?
Regards, Michael Solomon, SEE Potential
Hi Michael
I have clicked around the guidance on Burma but still come up a bit confused. What regimes do you think are like ‘such as in Burma’? Cuba, Sudan, USA, China, N Korea? Does one divest or no? If I click to say I have no links then I need to explain how avoid having no links?
Contrast this with guidance offered by KLD on Sudan, or FTSE4Good on the anti corruption issue.
I think your position on GRI is unfounded. First you claim that no such standard exists, now you link it’s presence with causality for further diminishing levels of trust. Certainly GRI does not allow for ‘greenwashing’ as materiality is a key principle and any level of independent assurance must address open issues. I suggest you read the unedited assurance statement published in Nike’s current CSR report. GRI is not however intended to be a consumer level quality standard. I do concede that CSR reports do need to improve but the GRI is a very credible, inclusive multi stakeholder process and it is at least delivering the necessary transparency to help civil society & government lead a more targetted push for higher standards.
I do take your point that there is a growing need for consumer level ethical assurance but these standards have to be clear, fair and credible if they are to be sustainable. Hopefully SEE can meet this need, I wish you the best of luck.
James
Hi James
Thanks again for your comments, just a few more points:
The objective of the human rights question citing Burma is to ascertain whether companies trade / avoid trading with governments that are known to use the proceeds of foreign investment to oppress their citizens. The military regime in Burma is widely acknowledged to be guilty of this, which is why it has been used as an example. Reports from bodies like the United Nations and Human Rights Watch would suggest that the governments of Zimbabwe and Sudan, in relation to Darfur (for example), could also be accused of similar activity.
SEE issues are not black and white. There is no ‘one size fits all’ solution for companies wishing to improve their SEE policies and practices, which is why our answering guidelines are designed to encourage companies to examine whether their SEE policies and practices could be improved. That SEE Companies accreditation requires transparency on such a wide range of SEE issues will, we believe, encourage companies to adopt better SEE policies and practices. We do not preach, which is why we don not advise companies to invest or divest in Burma — we simply present the facts as we and our expert SEE Questionnaire co-developers view them and allow companies to set their own course.
With regard to GRI and company reporting, Julian Oram of ActionAid UK provided this quote for our launch press release: ‘ActionAid believes that increased transparency is vital for greater confidence in the information provided by business. Annual reports tend to be limited in scope. The SEE Companies initiative focuses corporate attention on a wide range of areas, requiring businesses to consider how their policies and practices affect societies and the environment.’
While GRI may not necessarily allow for greenwashing, companies can pick and choose in which areas they are GRI compliant. SEE Companies accreditation does not allow companies to pick and choose on which issues they are transparent because transparency is required on every question we ask. SEE Companies accreditation is more comprehensive and therefore more robust.
Thanks also for your best wishes. Regards, Michael
Hi Michael
I think you are 100% right when you say that these issues are not black and white. The trouble it seems to me is that a SEE standard for ‘man on the street’ as a consumer label will give the impression that they are. The man on the street wants instant assurance possibly conveyed by a SEE brand id. This is where GRI has the advantage of consensus of at least being a big church, multistakeholder programme where this consensus can be credibly built. I admit that GRI is not meant to be a front end consumer assurance standard but I see huge opportunity fro SEE to build off that platform and loop back into it to input the views of the man on the street.
What worries me about all this debate especially as it relates to Burma and it’s ilk is the question of evaluation. How will you evaluate the conduct of a business operating in Burma or Zimbabwe? Are they a last bastion of positive engagement linking the regime to the expectations of the outside world OR are they propping up an inhumane regime? Who suffers most from a decision to divest: the people or the regime? Are the management of such enterprises willing or even capable of making these decisions? It seems to me in such cases a mass of consensus could be a very powerful influence. You say that you do not make these evaluations but only require transparency and allow the company to set their own course. This is a confusing message I fear – would you really certify SEE accreditation no matter the circumstances so long as the company is transparent? Surely not. I hope not.
You make a good point about the ability of companies to pick and choose indicators but they really must demonstrate the CSR strategy and materiality analysis as well as independent assurance. I think the stereotype used to describe this is the question: ‘what do you do with an oil company that forgets to deal with climate change in their CSR report?’ I think the answer is clear – it is just as revealing to identify not just what has been reported but what has not been. I think this is where civil society can then kick in and focus it’s influence and in so doing can help reduce this problem of perceived greenwash.
Brgds
James